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Employment Insurance Reform: Bad for Employees

Christine Davies

January 14, 2013

Christine Davies outlines how the Harper government’s recent employment insurance amendments will harm unemployed workers

The Employment Insurance (EI) system was introduced in Canada in the 1970s. EI “regular benefits” provide temporary financial assistance to unemployed Canadians. For most people, benefits are 55% of their weekly average insurable earnings, to a maximum of $485 per week.

Recently, the Harper government introduced several amendments to restrict the availability of EI benefits. These amendments came into effect last week.

Bill C-38, the Jobs, Growth and Long-term Prosperity Act, permits the government to establish “criteria for defining or determining what constitutes suitable employment for different categories of claimants for the purposes of any provision” of the Employment Insurance Act. This has, controversially, allowed the government to pass regulations that treat individual unemployed Canadians differently with respect to their EI benefits based on their past claims history. While EI benefits have always varied to some extent based on regional factors, notably the unemployment rate, the latest reforms result in variations based on individual factors, namely a claimant’s past history of work and unemployment.

There are now three categories of claimants: (1) long-tenured workers (who have paid into EI for 7 out of the last 10 years and have received 35 weeks or less of EI benefits in the last 5 years), (2) frequent claimants (who have had 3 or more claims for which they have received at least 60 weeks of benefits in the past 5 years), and (3) occasional claimants (people who do not fall in either of the first two categories).

During the first six weeks of their claim, frequent claimants may restrict their search for employment to similar jobs offering 80% of their previous wages, after which they must accept any suitable job offering 70% of their previous wages. By contrast, long-tenured workers are allowed to restrict their job search to look for jobs in their field at 90% of their previous wages for 18 weeks, after which they must expand their search to similar jobs paying 80% of their previous wages. Occasional claimants have 6 weeks to look for similar jobs at 90% of their previous wages, after which they must look for similar jobs paying 80% of their previous wages.

Effectively, the government has attempted to differentiate between “good unemployed Canadians” (those who have not previously made EI claims) and “bad unemployed Canadians” (those who have previously made EI claims). The implication is that people who have made EI claims more than once are moochers who are not trying hard enough to find and maintain employment, and that their claims should therefore be regarded with significant scepticism. Even if their past claims were not fraudulent, they will be treated more harshly under the new system, which is designed to shuffle them off EI and into new jobs as quickly as possible – including jobs outside of their field, or that come with a pay cut or a hefty commute of an hour or more each way.

So the stigma associated with unemployment is now being incorporated into government policy. Conservatives apparently believe that people who have made EI claims are simply “job shy” and need to be nudged with a stick towards any available job.

Bill C-38 also permits the government to establish criteria to determine what constitutes a reasonable job search, and what constitutes suitable employment. Union members will be particularly affected by these new changes. Individuals who get their work through union hiring halls and collect EI benefits while waiting for their next job opportunity may be forced to accept different, unrelated work outside of the hiring hall system or risk losing EI. Frequent claimants are not allowed to restrict their job search to opportunities through a union hiring hall at any time during a claim. This means they will be required to search for and accept employment outside of the hiring hall system, even if they have only been off work for a few weeks. Occasional claimants can only restrict their job search to the hiring hall for the first six weeks, and long-tenured claimants can only restrict their job search to the hiring hall for 18 weeks.

These reforms could have serious implications for union members in the long run. By forcing employees away from the union hiring hall and into presumably non-union jobs, employees may lose the long-term benefits and support that come with union membership, including strong pension and health and welfare benefits that enhance their economic security. This policy move is short-sighted and counterproductive.

The Harper government calls these reforms the “Connecting Canadians with Available Jobs initiative”. The reforms reflect the Conservative viewpoint that the main purpose of EI is to facilitate quick matches between job-seekers and employers, rather than to provide temporary insurance to people who find themselves out of work through no fault of their own. As Conservative MP Rona Ambrose tweeted, “New EI changes are like ‘E-Harmony’ for job seekers: matching Cdns looking for work with available jobs, data, support”.

The Harper government’s approach to EI is wrongheaded and is based on a fundamental misconception about the purpose for which EI was created. EI is not a dating service for the unemployed, and the jobless should not be forced to accept any lousy job (or date) that comes their way. Rather, EI is an economic benefit meant to alleviate the hardship associated with temporary unemployment.

Hopefully these new reforms will be short-lived, and EI benefits will soon be improved for out of work Canadians.


Christine Davies

Practice Areas

Employment Law, Labour Law